Financial management is one of the main challenges faced by small business owners. Often, the lack of organization and control over the available resources can lead to difficulties that compromise the growth and even the survival of the business. However, when well executed, good financial management can be the differential that transforms a regional company into a success story.
According to a survey carried out by Sebrae, 50% of small companies close their doors before completing five years of activity, and financial mismanagement is pointed out as one of the main causes. The study reveals that many entrepreneurs do not separate personal finances from business, in addition to not carrying out adequate planning for the future. This data shows that without efficient control, even promising businesses may not reach their maximum potential.
Samuel Modesto, specialist in business management and business mentor, reinforces the importance of a strategic vision for financial success. “Many entrepreneurs focus only on revenue and forget that real profit depends on strict control of expenses. In addition, it is essential to have a plan that includes reserves for unforeseen and future investments. Without this, any growth can be fleeting”, he explains. He also highlights that the lack of attention to details such as cash flow and fixed costs can lead to wrong decisions, such as cuts in essential areas or unnecessary investments.
Financial planning as a basis for strategic decisions
One of the first steps towards efficient financial management is planning. Setting clear goals, both short and long term, helps to direct resources more assertively. For example, a small trade that wants to expand its operations can start with a plan to reduce operating costs, such as renegotiating contracts with suppliers or adopting technologies that optimize processes.
Another important point is the separation between personal and business finance. Many entrepreneurs make the mistake of using the company’s cash to cover personal expenses, which can generate a financial imbalance. Creating an exclusive account for the business and establishing a fixed pro-labore are simple measures, but they make all the difference.
Cash control and impact on everyday life
Cash control is another essential tool for a company’s financial health. Knowing exactly how much you enter and leave the cashier allows you to identify spending patterns, avoid waste and make more informed decisions.
To Samuel Modesto, this control must be daily. “Cash flow cannot be overlooked. It is what will show whether the company is generating profit or just surviving. In addition, with a detailed control, it is possible to identify opportunities for improvement and investment”, he says.
A practical example is that of a small bakery that, when analyzing its cash flow, realizes that part of its products is being wasted due to poor inventory management. With adjustments in the purchasing and production process, the company manages to reduce costs and increase its profit margin.
the importance of reserves and investments
Finally, the creation of a financial reserve is a step that many small companies ignore, but which can be decisive in times of crisis. Having an emergency fund ensures that the company can face unforeseen events, such as drops in sales or increasing costs, without compromising its operations. In addition, part of the profits must be reinvested in the business, whether in infrastructure, team training or expansion.
Samuel Modesto concludes with a council for entrepreneurs. “Financial management is not just about numbers, but about vision and discipline. Those who can see beyond the present and plan carefully are more prepared to face the challenges and take advantage of the opportunities that come along the way”, he concludes.
